NOTE.-If by mistake even the contract may be re scinded, see note to section preceding-Ld. Mansfield's be 2563. Each party to a contract of insurance must What must communicate to the other, in good faith, all facts disclosed. within his knowledge which are or which he believes to be material to the contract, and which the other has not the means of ascertaining, and as to which he makes no warranty. NOTE.-This appears to be the rule in regard to fire insurance.-Gates vs. Madison County Ins. Co., 5 N. Y., pp. 469, 476. Though a fuller disclosure is required in marine insurance (see the Chapter thereon), it depends not on a difference of principle but of the extent of which the insurer may be deemed cognizant of the fact.-Angell Ins. (1st ed.), Sec. 174. And all such facts which the other has not the means of ascertaining (Le Roy vs. United Ins. Co., 7 Johns., p. 343; Seton vs. Low, 1 Johns. Cas., p. 1), and as to which he makes no warranty.-N. Y. Firemen's Ins. Co. vs. De Wolf, 2 Cow., p. 56; 2 Duer Ins., p. 576. 2564. Neither party to a contract of insurance is bound to communicate information of the matters following, except in answer to the inquiries of the other: 1. Those which the other knows; 2. Those which, in the exercise of ordinary care, the other ought to know, and of which the former has no reason to suppose him ignorant; 3. Those of which the other waives communication; 4. Those which prove or tend to prove the existence of a risk excluded by a warranty, and which are not otherwise material; and, 5. Those which relate to a risk excepted from the policy, and which are not otherwise material. NOTE. In 2 Duer Ins., these exceptions are stated, though in somewhat different language. Subd. 1.-2 Duer Ins., p. 552. This rule is usually stated with the addition that facts which the insurer may be presumed to know need not be communicated; but the true rule seems to be that though the insured trusts to his presumption that the insurer knows facts Matters not be cated which need communi without inquiry. Test of materiality Matters which each which he is not bound to know, he does so at his peril. In other words, the presumption is a mere rule of evidence, one method of showing that he had actual knowledge. Subd. 2.-2 Duer Ins., pp. 557-566; Seton vs. Low, 1 Johns. Cas., p. 1; Leroy vs. United Ins. Co., 7 Johns., p. 343. Subd. 3.-2 Duer Ins., pp. 566–572. Subd. 4.—2 Duer Ins., pp. 572-577; N. Y. Firemen's Ins. Co. vs. De Wolf, 2 Cow., p. 56; 20 Johns., p. 214. Subd. 5.-2 Duer Ins., p. 577, Sec. 15. Subd. 6.-As to those not otherwise material.-2 Duer Ins., p. 579, Sec. 16; Carter vs. Boehm, 3 Burr., p. 1905; Chase vs. Washington Mut. Ins. Co., 12 Barb., p. 595. 2565. Materiality is to be determined not by the event, but solely by the probable and reasonable influence of the facts upon the party to whom the communication is due, in forming his estimate of the disadvantages of the proposed contract, or in making his inquiries. 2566. NOTE.-2 Duer Ins., pp. 382-403. The question is not whether the loss that is claimed is attributable, in any degree, to the risks that were concealed; but whether, had the facts been known, the underwriter (insurer) would have limited himself to the premium that he received. He is discharged if the contract is not such as, with a knowledge of the truth, he would have consented to make.-De Costa vs. Scandert, 2 P. Wms., p. 170; Seaman vs. Fonereau, 2 Strange, p. 1183; Hodgson vs. Richardson, 1 Wm. Black, p. 463; Ely vs. Hallett, 2 Caines, p. 57. Each party to a contract of insurance is is bound to bound to know all the general causes which are open know. to his inquiry, equally with that of the other, and which may affect either the political or material perils contemplated; and all general usages of trade. NOTE.-Duer in his 2 Ins., pp. 559, 560, gives the general rule and special exceptions arising from special circumstances. See, also, Pacific Ins. Co. vs. Cattell, 4 Wend., p. 33. 2567. The right to information of material facts may be waived, either by the terms of insurance or by communi neglect to make inquiries as to such facts, where they Waiver of are distinctly implied in other facts of which informa- cation. tion is communicated. NOTE.-See Duer Ins., p. 560, and last preceding note. 2568. Information of the nature or amount of the Interest of insured. interest of one insured need not be communicated unless in answer to an inquiry, except as prescribed by Section 2587. NOTE.-Tyler vs. Etna Fire Ins. Co., 12 Wend., p. 507; 16 id., p. 385; 2 Am. Lead. Cases, p. 457; Niblo vs. North Amer. Ins. Co., 1 Sandf., p. 551. warranty. 2569. An intentional and fraudulent omission, on Fraudulent the part of one insured, to communicate information of matters proving or tending to prove the falsity of a NOTE.-2 Duer Ins., p. 435, Sec. 36, on the "State * ship, it is not to be doubted, may be insured. When opinion. 2570. Neither party to a contract of insurance is Matters of bound to communicate, even upon inquiry, information of his own judgment upon the matters in question. NOTE.-2 Duer Ins., p. 583, Sec. 20. Where the insurer is not to be charged with an equal knowledge, the insured, either without or upon inquiry, is bound to communicate all the facts that his knowledge or information embraces that are material to the risks, or may be deemed material by the insurer; but he is not bound to communicate his own conclusions as to the probability or improbability of past or future events, or their consequences, from the facts that he must disclose, nor his speculations, apprehensions, or fears arising therefrom, nor those of others known to him. This applies by the text to both parties. Representation, what When made. How interpreted. Representation as to future. How may affect policy. When may be withdrawn. A representation may be oral or written. 2571. A 2572. A representation may be made at the same time with issuing the policy, or before it. 2573. The language of a representation is to be interpreted by the same rules as the language of contracts in general. NOTE.-On the subject of this and the two preceding sections, see Title III, "Interpretation of Contracts," ante, Part III, Div. III, Vol. I, of this Code. See, also, Secs. 1751-1754, inclusive, ante, on the subject of "Fraud" in contracts. 2574. A representation as to the future is to be deemed a promise, unless it appears that it was merely a statement of belief or expectation. NOTE.-A representation of future facts, although positive in its terms, may in some cases be justly interpreted not as an undertaking for the truth of the facts but as referring solely to the expectation or belief of the party. *Notwithstanding, "I see no reason for doubting that a positive stipulation by the owner of goods as to the future sailing of the vessel is just as binding as a positive representation of the same fact by the owner of the vessel." To make such an agreement by parol must be as competent to one as to the other, and intention is the only question in the construction.-2 Duer Ins., pp. 664, 665, Sec. 14. 2575. A representation cannot be allowed to qualify an express provision in a contract of insurance; but it may qualify an implied warranty. NOTE.-See 2 Duer Ins., p. 671, Sec. 18. "It is plain that an implied warranty can never be superseded by a representation, unless the facts represented are inconsistent with the truth or obligation of the warranty." See, also, Burgess vs. Wickham, 3 Best & Sm., p. 669. 2576. A representation may be altered or withdrawn before the insurance is effected, but not afterwards. NOTE.-"A representation once made is construed to be binding on the party, unless it is altered or withdrawn before the insurance is effected."-2 Duer Ins., p. 679, Sec. 24. intended 2577. The completion of the contract of insurance Time is the time to which a representation must be presumed by repreto refer. NOTE. "The completion of the policy is sentation. ing infor 2578. When a person insured has no personal Representknowledge of a fact, he may nevertheless repeat in- mation. formation which he has upon the subject, and which he believes to be true, with the explanation that he does so on the information of others, or he may submit the information, in its whole extent, to the insurer; and in neither case is he responsible for its truth, unless it proceeds from an agent of the insured, whose duty it is to give the intelligence. NOTE.-Without personal knowledge, and so stating, the insured is not responsible for the truth of information given (2 Duer Ins., p. 703; Tidmarsh vs. Washington Ins. Co., 4 Mason, p. 439; Williams vs. Dellafield, 2 Caines, p. 329) unless it proceeds from an agent of the insured, whose duty it is to give the intelligence.-2 Duer Ins., p. 705; Dennistoun vs. Lillie, 3 Bligh, p. 202. 2579. A representation is to be deemed false when Falsity. the facts fail to correspond with its assertions or stipulations. NOTE.-When the representation, whether affirmative or promissory, is made with an intent to deceive, the fraud, in all cases, vitiates the contract. When the falsity of the representation is accidental, if the representation is wholly false, or if it was partially false at the time when made, or at the commencement of the risk, the insurer is exonerated; but when the policy has attached, and the representation is falsified by a subsequent event, such accidental falsity does not render the policy void in its origin. This is a general principle, controlling fraudulent contracts, and should apply as well to the contract of insurance as any other. 19-vol. ii. |